Credit Card Payoff
How long a card balance takes to clear at a given monthly payment, and what it costs.
Enter your numbers
Formula
How the calculation works
Each month the interest is charged on the balance, the payment settles that first, and only what is left reduces the principal. At 22% the monthly rate is 1.833%, so on 5,000 the first month's interest is 91.67 and a 200 payment cuts the debt by just over 108. Early on most of the payment is rent on the money, which is why the balance barely seems to move.
The formula folds that month-by-month loop into a single logarithm, and what it turns on is the ratio of payment to monthly interest rather than the balance alone. Scale the balance and the payment together and the time is unchanged: 5,000 at 200 a month and 10,000 at 400 both take 34 months, though the interest doubles with the balance.
There is a hard floor. If the payment does not exceed the monthly interest the balance never falls and no number of months clears it, so the tool refuses instead of returning a huge figure. The break-even payment here is the monthly interest, about 91.67; a payment of 100 clears the 5,000 but takes 137 months and costs 8,700 in interest.
Common mistakes
- Paying only the minimum. A minimum is often set as a small share of the balance, so a 5,000 balance at 22% may ask for only about 100 a month; at that rate the debt runs for years and the interest ends up exceeding the original balance.
- Confusing the monthly interest with the annual rate. 22% a year is 1.83% a month, not 22%, and mixing them makes the payoff look impossible or far cheaper than it is.
- Reading the total interest as exact. The tool rounds the term up to whole months, so the last payment is usually smaller than the one you typed and the real interest sits a little below the figure shown.
When to use it
- Use it to see how many months a given payment buys and what the interest adds up to, and to test what pushing the payment up by 50 or 100 does to both.
- It is the wrong tool for a balance you keep adding to, because it assumes the card is frozen and no new spending lands. It also cannot price a balance transfer or a consolidation; for two loans side by side, use the loan comparison tool.
Worked example
A 5,000 card balance at 22% paying 200 a month takes 34 months and costs 1,800 in interest.
Common questions
What if I only pay the minimum?
That is the trap. At 22%, paying only the minimum takes years and the interest can exceed the original balance. Put a small number in above and watch it.
What if my payment is below the monthly interest?
Then the debt never clears and grows instead. The calculator stops rather than showing a number, because that would mislead.
Related tools
-
Loan Repayment (EMI)
The fixed monthly payment on a loan, and what the interest costs over the whole term.
-
Break-Even Point
How many units must sell before a business covers its costs.
-
Mortgage Affordability
How large a mortgage your income supports, and which limit actually binds.
-
Total Loan Cost
What the repayments add up to, and how much of it is interest.
-
Extra Payment Saving
What paying a little extra each month saves in time and interest.
-
Interest Only Payment
What interest-only costs each month, and what is still owed at the end.